Corporate Governance and Ethical Responsibility - Term Paper Example

? Corporate Governance and Ethical Responsibility Question One Dr. DoRight has to deal with stakeholders, people with interest, onthe services and performance of the hospital, in the daily hospital management. The internal stakeholders that Dr. DoRight may have to deal with on daily basis include those people situated inside the hospital and whose actions affect the running of the hospital. They can include employees, management team, and shareholders. The external stakeholders, on the other hand, include those who are not linked directly to the hospital although their activities can influence the operations of the hospital. They can include the patients, surrounding community and government. However, this paper only focuses on three stakeholders: the employees, shareholders and the patients. As a hospital director, Dr. DoRight owes the stakeholders duty of loyalty in all aspects of the hospital performance. This duty requires that Dr. DoRight should act in the best interest of the shareholders and the hospital as an entity. The duty of loyalty also restricts Dr. DoRight to make him stay away from his personal interests and self dealing which can be at the expenses of the stakeholders. Dr. DoRight also owes the stakeholders duty of loyalty that dictates him not to enter into some acts that may help him receive personal benefits improperly and end up causing harm to the stakeholders and the hospital at large. To the patients, Dr. DoRight owes a duty of loyalty that requires him to act in good faith and care which any other prudent and ordinary person in the same position would accord in a similar situation in order to safeguard both the interest of the patients and the hospital (Martin, 2001). The duty of loyalty is also owed to the employees, especially in making decisions. Dr. DoRight is required to have his decisions made in good faith, being well informed and with honesty when dealing with the employees in order to safeguard their interests, as well as those of the hospital through the judgment rule of the business. In order to have this protection invoked, Dr. DoRight owes them the duty of information on all the reasonable material information available. The rule of business judgment may not protect Dr. DoRight when he has financial interests at a personal level in the transactions, fails to have information on the situations, is not independent, or fails to carryout the duty of loyalty and care. Dr. DoRight must make sure that he follows the standard of fairness to the hospital and all the stakeholders (Pickstock, 2007). Dr. DoRight as a director of the hospital has the duty to facilitate the maximization of the shareholders’ wealth and enhance the interests of the shareholders. In summary, Dr. DoRight must ensure that maintains the rights of the shareholders and treats them equally, honor the interest of all other stakeholders like the patients, observes integrity and ethics in his duties, and remains transparent with all his actions. Question two Stakeholders have different interests in hospital. For instance, the shareholders who invested on the hospital are interested in the survival and profitability of the firm. They are classically concerned with the allocation of investment earnings and their residual earnings that is paid to the as dividends; the company management, including Dr. DoRight, is interested in the efficiency of the hospital in generating the profits. The general performance of the hospital is regarded as the effectiveness of management and can be observed by particular financial rations; the customers such as the patients are interested in the ability of the hospital to continue providing the health services to them; employees may be interested in high wages in order to keep their work running; suppliers on the other side want to see their products bought and paid for by the hospital and the lenders are interested in the liquidity position of the hospital to check if they will be paid in time; and the community in general is concerned with environmental issues and social responsibility of the hospital. Hence, these varying interests may cause potential conflicts among the stakeholders themselves. Certain potential conflicts which may arise from the stakeholders concerning the hospital preferred shareholders and preferred stock because in most cases the preferred shareholders opt out of their fiduciary rights of duty. However, this can be solved by having the commentators proposing the common shares. This rule can be adopted by courts to fairly address interests and the rights of all the parties and offer them protection in a horizontal conflict. Dr. DoRight should remain independence and exercise a complete independent judgment in business whenever he performs his duties. Other stakeholders may not view the actions of Dr. DoRight as impartial and hence the conflicts of interest certainly undermines the perceived independence of Dr. DoRight, his compensation and perks, his relationship with the executives, and the financial relationship with the company. Therefore Dr. DoRight must ensure he devotes his efforts to the position he holds and investigate well before responding to any red flag. He should realize that his loyalty duties are completely owed to the shareholders and not fellow managers (Martin, 2001). Conflict of interest arises when other stakeholders feel their needs are not met fully. The admission of a new stakeholder may lead the hospital to an ethical dilemma on the mechanism of satisfying the needs of the new members and avoid conflicts at the same time with the existing stakeholders. Some particular stakeholders may possess completely different and conflicting success measurements, which may lead to a detrimental effect by another stakeholder over the rewards. Question three It is the duty of Dr. DoRight to show care to his stakeholders such as patients. These are the direct customers of the hospital and they owe them duty to care. If patients are dying out of negligence of the doctors and nurses, it is ethically right for Dr. DoRight to report and have an investigation carried out. It is within the ethics and code of conduct of the medical personnel to preserve life. Acting out of negligence leading to the death of patients is unethical and should be reported just as done by Dr. DoRight. As a director, Dr. DoRight should take advanced steps and carry out an audit as to why there are acting negligently and take considerable actions whether to take disciplinary actions on the implicated doctors (Johnson, 2001). Ethical issues among the stakeholders can pose a serious impact on the affairs of the company, in this case the negligence of the doctors resulted into mass killing of the patient which in one way or the other. Unethical activities may lead to poor health standards. The safety of the patients has a lot to do with the image of the hospital. Unethical acts such as that experience in the hospital can result into low productivity, loss of hospital reputation, heavy financial loss to the hospital that comes from compensation pay outs and tribunals, and poor morale among employees. Therefore Dr. DoRight should take disciplinary actions on the implicated doctors since even after two years there was no report on the investigation given to him (Martin, 2001). Question four The principle of deontology states that people in employment should adhere to their duties and obligations in case of any dilemma. Therefore doctors in the case Dr. DoRight, the doctors were supposed to follow their duties and obligations to the patients since upholding their duties is what is ethical considerably. The doctors were not supposed to act negligently to the patients because that was not ethical. They should uphold their duties to them as provided for in their job description. Anyone following this deontology theory produces very consistent performance and decisions because they are based on the set of duties of individual. Deontology principle offers the foundation for the special obligations and duties to particular people for instance those within a family, an older sister have a duty and obligation to protect her little brother when crossing a busy street together. The doctors were supposed to carry out their obligations of preserving the life of the patients. This deontology principle also commends those people who exceed their obligations and duties (Hunter, 2007). The principle of deontology however has some particular flaws in it. One of the weaknesses of this principle is that it has no logical or rationale basis for which the duties of individual are decided. For example, in the case of Dr. DoRight, he may have decided that reporting the negligence is his duty. This is a noble duty to the hospital although we may not know why he is the one to report such cases and not the immediate managers. Another weakness of deontology principle is the fact that sometimes the duty of a person may conflict with those of others. Deontology principle is also not the welfare of others in to consideration. The tendency of duties and obligations conflicting does not bring us to an ethically right resolution and does not protect the other people’s welfare from the decisions of a deontologist. Because deontology principle is not founded by the context of specific situations, the principle it does not offer any direction in case one is involved in a complex circumstance where their obligations and duties conflict (Friedman, 2006). Question five The principle of utilitarian theory of ethics is based on the ability of people to foresee the implications of their actions. According to utilitarian principle, the choice yielding the maximum benefit to many people is what is considered an ethically right choice. One of the benefits of this principle is that one can make comparisons between the same solutions that are predicted and apply a particular point system in determining the choice that is of more benefit to the majority of people. This system offers a rationale and logical argument for every decision and enables an individual to use it on every case context. For instance in the case of Dr. DoRight, the doctors were supposed to make choices that benefit most people, and it is obvious that acting with negligence do not benefit the majority. If Dr. DoRight chooses to discipline his workers, this wail benefit the majority as the number of deaths out of negligence will be reduced (Davis, 2008). References Davis J. (2008). A handbook of public & stakeholder engagement. London: SAGE. Friedman, L. (2006). Stakeholders theory and practice. Oxford: Oxford University Press. Hunter, D. J. (2007). Managing for health. New York: Routledge. Johnson, G. (2001). Exploring public sector. Boston: Prentice Hall. Martin, V. (2001). Managing in health and social care. London: Routledge. Pickstock, A. (2007) Towards world-class commissioning engaging stakeholders. London: Primary Care Trust. Read More